Hundreds of Claims-Adjusting Firms Newly Licensed in Florida in Wake of Senate Bill 1598

Posted in Legal Alerts on January 14, 2022

Governor Ron DeSantis recently signed a series of bills into law that reform the property and casualty insurance industry in Florida. There was a widespread recognition that property insurance litigation and other insurance costs were spiraling out of control. Both policyholders and insurance companies were being harmed by the intermediaries that were enriching themselves at everyone’s expense with questionable tactics. In the wake of one of these new laws, Senate Bill 1598, over 400 public adjuster firms have registered with the state.

Public Adjusters Are Supposed to Serve the Public 

There are several types of adjusters in Florida. One type of adjuster works on behalf of insurance companies to estimate the value of damages. Another type, public adjusters, serve policyholders and help them file claims. They estimate damages and review settlement offers from insurance companies. A public adjuster is supposed to work as an advocate on behalf of a policyholder in dealing with an insurance company. Before Senate Bill 1598, adjusters needed to be licensed individually, but the companies they worked for did not need to be. The existing qualification requirements were relatively minimal. There were few rules to restrict practices that many would view as corrupt. 

For example, oftentimes, public adjusters move very quickly after large disasters or other incidents to sign up as many people as they can to use their services. This is when they can make a lot of money. They race into neighborhoods, either making baseless promises to homeowners or pressuring them to sign contracts at inflated rates. In some cases, they have been known to use unscrupulous tactics to sign up customers.

Some Public Adjusters Line Their Pockets at Everyone Else’s Expense 

Adjuster fraud has been a major issue in Florida insurance claims. This misconduct has impacted many types of insurance policies. Estimates often did not reflect the true amount of damages, and customers had to wait indefinitely for the money they desperately needed in order to repair their property damage or rebuild because of it. In addition, many public adjusters would take kickbacks from attorneys and contractors who benefited from the results of their work. Both insurance companies and their customers suffered. Some public adjusters masterminded complex fraudulent schemes to steal from insurance companies.

For example: 

  • A Miami man acted as an unlicensed public adjuster and forged homeowner signatures on water damage claims, bilking insurance companies out of approximately $100,000.
  • A claims adjuster participated in a scheme with four other people to file false auto insurance claims, stealing nearly $250,000 from Zurich Insurance Group.
  • A claims adjuster masterminded a scheme that stole over a quarter of a million dollars from Security First Insurance Co. by using the insurer’s computer system to reopen claims and write checks to ghost vendors.

Public Adjusters Took Money from Lawyers and Contractors 

Other pubic adjusters have conflicts of interest in their work. They may recommend unnecessary work, steering claimants to friends and relatives and running up the costs for insurance companies. This does not help their policyholder clients because it makes it more difficult to settle their claims with insurance companies. A policyholder is less likely to settle when they think they are getting pennies on the dollar for what they believe is a large claim. 

Adjusters, contractors, and attorneys can often work together in a web, hiking the costs of insurance claims. The lawyer pays the adjuster because they end up with a valuable claim where they can take about one-third of the settlement as their fee. Everyone benefits at the expense of the insurance company that has a legal obligation to pay the claim and the customer who needs the money.  

In the end, insurance companies are forced to pass the costs of public adjuster fraud on to policyholders in the form of higher premiums. In addition, corrupt adjusters also ruin the lives of claimants because claimants do not benefit financially from adjusters’ misconduct. They are typically every bit as much of a victim as the insurance companies.

Previously, Only Individual Adjusters Needed Licensing 

Individual adjusters must be licensed in Florida. However, this is often not enough to root out bad adjusters and eliminate fraud. There are systemic causes of misconduct that go far beyond the individual adjuster. An adjuster may be doing what they have been instructed to do by their company or acting according to what they believe is the corporate culture. Florida has over 175,000 licensed adjusters, many of whom work for larger organizations. 

Punishing an individual adjuster is not always enough to stop fraud. The individual’s bad actions could be a sign of something larger in their company. Pulling their license would just be a temporary solution that would not address systemic issues. Meanwhile, the company would get away with fraudulent activities.  

The hope is that Senate Bill 1598 will better help Florida get a handle on what has become a major problem in the state. After catastrophic events, public adjusters can often end up being far more of a hindrance than a help, making life more difficult for policyholders.

Other Changes to the Way Adjusters Do Business 

Besides registration of companies, Senate Bill 1598 also makes several other crucial changes to protect consumers. Adjusters are now legally barred from receiving any compensation from attorneys and contractors. Further, adjusters must give detailed and itemized estimates to policyholders within 60 days after they sign their contracts. This will benefit policyholders by helping them better understand the estimates and getting the claims process started more quickly. Florida may also now be better able to regulate an industry that has promoted unscrupulous practices and operated relatively free from scrutiny for decades.